Section 80C Mutual Funds

Under Section 80C of the Income Tax Act, taxpayers can save a sizeable chunk on tax, depending on what they invest in. As per the provisions laid out in this section, individuals can avail of tax deductions up to Rs. 1.5 lakhs by investing in a range of tax saving or investment options. Among the best investment options available to both salaried and self-employed individuals are Equity Linked Savings Scheme Mutual Funds (ELSS), which offer individuals the dual benefit of tax deduction as well as wealth creation.

Features of ELSS Mutual Funds

ELSS Mutual Funds come with a number of attractive features, making it a wise option to invest in:

Low lock-in period of 3 years, which is considerably less than any other investment option under Section 80C.

Investors can avail of tax deduction up to Rs. 1.5 lakhs under Section 80C

Any gains earned through ELSS Mutual Funds are exempt from tax

Offers investors high earning potential by exposing them to equity markets

Withdrawals made from ELSS Mutual Funds are also exempt from tax

Investors have the opportunity to earn dividends during the lock-in period

Individuals can invest in ELSS Mutual Funds with as little as Rs. 500, with no maximum limit

Here are the top three ELSSs you can invest in for tax saving purposes in 2020:

Aditya Birla Sun Life Tax Relief 96

Aditya Birla Sun Life Tax Relief 96 is an open-ended fund which comes with a 3-year lock-in period. It carries a moderately high risk, offering returns of 25.54% ever since it was launched. The returns offered by Aditya Birla Sun Life Tax Relief 96 per year are 20.53% for a duration of one year, 11.78% for a duration of three years, and 23.96% for a duration of five years. The AUM (Assets Under Management) of this fund is approximately Rs.4,759 crore, and ever since it was launched, its performance has been better than its benchmark S&P BSE 200 Fund. The major portfolio holdings of Aditya Birla Sun Life Tax Relief 96 include Gillette India Ltd., Sundaram Clayton Ltd., Reliance Industries Ltd., Honeywell Automation India Ltd., Pfizer Ltd., Bayer CropScience Ltd., etc. The minimum SIP allowed under this fund is Rs.500.

Reliance Tax Saver (ELSS) Fund

Reliance Tax Saver (ELSS) Fund carries moderately high risk, offering returns of 15.46% ever since it was launched on the 21st of September, 2005. The aim of the fund is to get long-term capital appreciation through investment in a portfolio that mainly comprises equity and equity-related instruments. The returns offered by Reliance Tax Saver (ELSS) Fund are 9.25% for a duration of one year, 6.79% for a duration of three years, and 22.96% for a duration of five years. The AUM (Assets Under Management) of this fund is around Rs.10,758 crore. The major portfolio holdings of Reliance Tax Saver (ELSS) Fund include Grasim Industries Ltd., HDFC Bank Ltd., Kotak Mahindra Bank Ltd., ICICI Bank Ltd., Reliance Industries Ltd., Maruti Suzuki India Ltd., Larsen & Toubro Ltd., Infosys Ltd., the State Bank of India, etc. The minimum SIP allowed under this fund is Rs.500.

IDFC Tax Advantage (ELSS) Fund

The risk involved with IDFC Tax Advantage (ELSS) Fund is moderately high, and the fund has offered returns of 20.94% ever since it was launched on the 28th of December, 2008. The aim of the scheme is to create a diversified portfolio which comprises of stocks of firms and organisations that have strong fundamentals. The returns offered by IDFC Tax Advantage (ELSS) Fund per year are 24.77% for a duration of one year, 12.13% for a duration of three years, and 23.02% for a duration of five years. The AUM (Assets Under Management) of the fund is nearly Rs.897 crore. The major portfolio holdings of IDFC Tax Advantage (ELSS) Fund include Maruti Suzuki India Ltd., KEC International Ltd., ICICI Bank Ltd., VRL Logistics Ltd., HDFC Bank Ltd., Minda Industries Ltd., CBLO (CCIL), Future Retail Ltd., etc. The minimum SIP allowed under this plan is Rs.500.

GST rate of 18% applicable for all financial services effective July 1, 2017.

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